A key factor that is limiting the adoption of electric vehicles is that they are simply more expensive than their gas-powered counterparts. For instance, a new Volkswagen Golf will cost you about $26,000, whereas the automaker’s first mass-market electric car will cost you at least $39,000.
The reason for this price difference is due to the simple fact that EVs cost more to produce at this moment in time, but new research expects them to reach cost parity with gas-powered cars by 2024.
The research, which was conducted by investment bank UBS, is based on a detailed analysis of batteries from the seven largest manufacturers. The reason the research analysis is focused on electric car batteries is that they are the most expensive part of the car to make, with batteries accounting for between a quarter and two-fifths of the cost of the entire vehicle. If the cost of producing EV batteries drops, then the overall cost of manufacturing electric cars will drop too.
From the analysis, the researchers determined that the extra cost of manufacturing battery electric cars versus their fossil fuel equivalents will diminish to just $1,900 per car by 2022. By 2024, that extra cost is expected to disappear completely. This is a huge deal considering that it has long been thought that the world will rapidly transition away from vehicles that burn fossil fuels when electric cars cost the same to make as conventional cars.
Based on the analysis, UBS said that carmakers that try to hang on to gas-powered car sales risk being left behind by rivals such as Tesla and Volkswagen, the world’s largest carmaker by volume, which has committed upwards of $42.9 billion towards selling electric cars. Overall, we hope this analysis will awaken automakers and force them to shift their focus towards producing EVs rather than cars that burn fossil fuels.